Retained jurisdiction essential to enforce settlement agreement

Seasoned litigators are well aware of the expedited procedures to enforce settlement agreements under Code of Civil Procedure Section 664.6. The recent case of Sayta v. Chu, 2017 DJDAR 11269, is an "object lesson" on how to comply with its requirements and the dire consequences for failure to do so.

CCP 664.6

Consisting of only 73 words, Section 664.6 is elegant in its simplicity. It authorizes parties to pending litigation to stipulate in writing, or orally before the court, the terms of their settlement. Section 664.6 further provides that, "[i]f requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement." Should a party breach that agreement, the other party may bring a motion before the trial court to enforce the terms of the settlement, even after dismissal of the case. This Section was enacted to provide a summary procedure for enforcing settlement agreements without the need to bring a new lawsuit.

The Sayta Case

Shaunak Sayta subleased an apartment bedroom in San Francisco. After various disputes arose, he brought claims before the superior court and San Francisco Rent Board. The parties settled and entered into a confidential settlement agreement. The superior court action was dismissed without any party requesting the court to retain jurisdiction. Sayta then filed a motion with the court under Section 664.6 seeking to enforce the settlement agreement's confidentiality provision. He alleged that one of the defendants "had placed [the Agreement] ... on the public record," and sought $15,000 in liquidated damages. The trial court found no violation of the confidentiality provision and denied the motion. Sayta timely appealed.

Because the parties failed to request retention of jurisdiction before dismissal of the action, the appellate court vacated the trial court's order as void. The trial court lacked subject matter jurisdiction after the voluntary dismissal of the action.

Under the holding in Wackeen v. Malis, 97 Cal. App. 4th 429 (2002), the request for retention of jurisdiction must comport to the three requirements of Section 664.6: (1) made during the pendency of the action; (2) by the parties themselves; and (3) in writing or orally before the court.

Sayta argued that it was sufficient for the parties to merely stipulate to retained jurisdiction -- even though the request was not conveyed to the court -- so long as the stipulation was entered into during the pendency of the action. Strongly rejecting that notion, the appellate court observed, "Sayta fails to explain how the court could have fathomed a 'request' for retained jurisdiction, much less granted it sub silentio from a secret handshake of the parties."

In short, because the parties failed to request the trial court to retain jurisdiction before the action was dismissed, or alternatively seek to set aside the dismissals, the trial court lacked jurisdiction to hear Sayta's motion.

Lessons Learned

The issue is subject matter jurisdiction. Parties to a lawsuit cannot confer jurisdiction by stipulation between themselves. They must invoke the last sentence of Section 664.6 and specifically request the court to retain jurisdiction. This request must comport to the three requirements of Section 664.6. It must be made to the trial court during the pendency of the action (before the dismissal is filed), by the parties themselves, in writing or by stipulation before the court. Only then may a party to a settlement agreement invoke the expedited procedure of Section 664.6 to enforce the settlement.

If the parties have not made a pre-dismissal jurisdiction retention request, the only way to enforce a written settlement agreement is to file a new lawsuit, assert a breach of contract claim based upon the settlement agreement, and move for summary judgment. Of course, the opposing party may raise triable issues of material fact that would require a trial, the very cumbersome and expensive process Section 664.6 was enacted to avoid.

Conditional Settlements

Another way to enforce a settlement agreement, especially one with installment payments, is a "conditional settlement." Under the California Rules of Court, Rule 3.1385(c), parties to a settlement may file Judicial Council Form CM-200 and indicate that the dismissal is conditioned "on the satisfactory completion of specified terms that are not to be performed within 45 days of the date of the settlement." The filing of a notice of conditional settlement removes the case from the computation of time used to determine case disposition time. Because the case is not dismissed until completion of the "specified terms," usually payment in full of the settlement amount, the trial court never loses jurisdiction to enforce the settlement under Section 664.6. The issue in the Sayta never arises in this instance.

Conclusion

Section 664.6 provides a valuable tool in aid of enforcing settlement agreements, but great care must be taken to comply with its requirements. If the dismissal is unconditional, counsel must request retention of jurisdiction before filing the dismissal. Alternatively, a conditional settlement may be used. Either way, in the event of breach of a settlement agreement, the key to an effective Section 664.6 motion is to ensure that the court retains jurisdiction to hear it.